2004 Instructions for Form 1040 (ALL) - Supreme Law Firm

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IF the person THEN the most line 31, reduce the premiums by the amount • Customs duties. was, at the end you may deduct on line 31. • Federal estate and gift taxes. But see of 2004, age . . . is . . . Note. If, during 2004, you were an eligible the instructions for line 27 on page A-6. trade adjustment assistance (TAA) recipi- 40 or under $ 260 • Certain state and local taxes, includent, alternative TAA recipient, or Pension ing: tax on gasoline, car inspection fees, Benefit Guaranty Corporation pension reassessments for sidewalks or other im- 41–50 $ 490 cipient, you must complete Form 8885 before completing Schedule A, line 1. provements to your property, tax you paid 51–60 $ 980 When figuring the amount of insurance for someone else, and license fees (mar- 61–70 $ 2,600 premiums you can deduct on Schedule A, riage, driver’s, dog, etc.). do not include any health coverage tax 71 or older $ 3,250 credit advance payments shown in box 1 of Form 1099-H. Also, subtract the amount shown on Form 8885, line 4 (reduced by Line 5 any advance payments shown on line 6 of that form), from the total insurance premiums you State and Local Income or paid. Examples of Medical and Dental Payments You Cannot Deduct General Sales Taxes Whose medical and dental expenses can You can elect to deduct state you include? You can include medical and • The basic cost of Medicare insurance and local general sales taxes indental bills you paid for: (Medicare A). stead of state and local income • Yourself and your spouse. taxes. You cannot deduct • All dependents you claim on your re- If you were age 65 or older but both. turn. TIP not entitled to social security State and local income taxes. • Your child whom you do not claim as If you deduct benefits, you can deduct premia dependent because of the rules explained state and local income taxes, check box a ums you voluntarily paid for in Pub. 501 for children of divorced or sep- on line 5. Include on this line the state and Medicare A coverage. arated parents. local income taxes listed below. • Any person you could have claimed as • State and local income taxes withheld • The cost of diet food. a dependent on your return if that person from your salary during 2004. Your • Cosmetic surgery unless it was neces- had not received $3,100 or more of gross Form(s) W-2 will show these amounts. sary to improve a deformity related to a income or had not filed a joint return. Forms W-2G, 1099-G, 1099-R, and congenital abnormality, an injury from an Example. You provided over half of 1099-MISC may also show state and local accident or trauma, or a disfiguring disease. your mother’s support but cannot claim her income taxes withheld. • Life insurance or income protection as a dependent because she received wages • State and local income taxes paid in policies. of $3,100 in 2004. You can include on line 2004 for a prior year, such as taxes paid 1 any medical and dental expenses you paid • The Medicare tax on your wages and in 2004 for your mother. with your 2003 state or local income tax tips or the Medicare tax paid as part of the return. Do not include penalties or interest. self-employment tax or household employ- Reimbursements. If your insurance company paid the provider directly for part of • State and local estimated tax pay- ment taxes. your expenses, and you paid only the ments made during 2004, including any • Nursing care for a healthy baby. But amount that remained, include on line 1 part of a prior year refund that you chose to you may be able to take a credit for the only the amount you paid. If you received a have credited to your 2004 state or local amount you paid. See the instructions for reimbursement in 2004 for medical or dental expenses you paid in 2004, reduce your • Mandatory contributions you made to income taxes. Form 1040, line 47. • Illegal operations or drugs. 2004 expenses by this amount. If you re- the California, New Jersey, or New York ceived a reimbursement in 2004 for prior • Imported drugs not approved by the Nonoccupational Disability Benefit Fund, year medical or dental expenses, do not U.S. Food and Drug Administration Rhode Island Temporary Disability Benefit reduce your 2004 expenses by this amount. (FDA). This includes foreign-made ver- But if you deducted the expenses in the Fund, or Washington State Supplemental sions of U.S.-approved drugs manufactured earlier year and the deduction reduced your Workmen’s Compensation Fund. without FDA approval. tax, you must include the reimbursement in Do not reduce your deduction by any: • Nonprescription medicines (including income on Form 1040, line 21. See Pub. • State or local income tax refund or 502 for details on how to figure the amount nicotine gum and certain nicotine patches). to include. credit you expect to receive for 2004, or • Travel your doctor told you to take for • Refund of, or credit for, prior year Cafeteria plans. rest or a change. Do not include on line 1 insurance premiums paid by an state and local income taxes you actually • Funeral, burial, or cremation costs. employer-sponsored health insurance plan received in 2004. Instead, see the instruc- (cafeteria plan) unless the premiums are tions for Form 1040, line 10. included in box 1 of your Form(s) W-2. State and local general sales taxes. If you Also, do not include any other medical and Line 1 elect to deduct state and local general sales dental expenses paid by the plan unless the taxes, you must check box b on line 5. To Medical and Dental amount paid is included in box 1 of your Form(s) W-2. figure your deduction, you can use either of Expenses the following methods. Enter the total of your medical and dental 1. The actual state and local general expenses (see page A-1), after you reduce sales taxes (including compensating use these expenses by any payments received Taxes You Paid taxes) you paid plus any selective sales from insurance or other sources. See Reimtaxes if the tax rate was the same as the bursements on this page. Taxes You Cannot Deduct general sales tax rate. For selective sales Do not forget to include insur- taxes on food, clothing, medical supplies, • Federal income and excise taxes. TIP ance premiums you paid for and motor vehicles, the tax is deductible medical and dental care. But if • Social security, Medicare, federal un- even if the tax rate was less than the general you claimed the self-employed employment (FUTA), and railroad retire- sales tax rate. For selective sales taxes on health insurance deduction on Form 1040, ment (RRTA) taxes. motor vehicles for which the tax rate was A-2
more than the general sales tax rate, the tax Refunds and rebates. If you received a re- property. It must provide basic living acis deductible only up to the amount of tax fund or rebate in 2004 of real estate taxes commodations including sleeping space, that would have been imposed at the gen- you paid in 2004, reduce your deduction by toilet, and cooking facilities. eral sales tax rate. Do not include sales the amount of the refund or rebate. If you taxes paid on items used in your trade or received a refund or rebate in 2004 of real Limit on home mortgage interest. If you business. estate taxes you paid in an earlier year, do took out any mortgages after October 13, 2. The Optional State Sales Tax Tables, not reduce your deduction by this amount. 1987, your deduction may be limited. Any which are available in Pub. 600. If you use Instead, you must include the refund or re- additional amounts borrowed after October the Optional State Sales Tax Tables, you bate in income on Form 1040, line 21, if 13, 1987, on a line-of-credit mortgage you can add to the table amount any state and you deducted the real estate taxes in the had on that date are treated as a mortgage local general sales taxes you paid on motor earlier year and the deduction reduced your taken out after October 13, 1987. If you vehicles, boats, and any other items speci- tax. See Recoveries in Pub. 525 for details refinanced a mortgage you had on October fied in Pub. 600. The deductible amount of on how to figure the amount to include in 13, 1987, treat the new mortgage as taken tax on motor vehicles cannot exceed the tax income. out on or before October 13, 1987. But if that would have been imposed at the genthe old mortgage, treat the excess as a mort- you refinanced for more than the balance of eral sales tax rate. For boats, the tax is deductible only if it was imposed at the gage taken out after October 13, 1987. Line 7 general sales tax rate. See Pub. 600 for details. Do not include sales taxes paid on See Pub. 936 to figure your deduction if Personal Property Taxes items used in your trade or business. either (1) or (2) below applies. If you had Enter personal property tax you paid, but more than one home at the same time, the only if it is based on value alone and it is dollar amounts in (1) and (2) apply to the charged on a yearly basis. total mortgages on both homes. Line 6 Example. You paid a yearly fee for the 1. You took out any mortgages after Ocregistration of your car. Part of the fee was tober 13, 1987, and used the proceeds for Real Estate Taxes based on the car’s value and part was based purposes other than to buy, build, or im- Include taxes (state, local, or foreign) you on its weight. You can deduct only the part prove your home, and all of these mortpaid on real estate you own that was not of the fee that was based on the car’s value. gages totaled over $100,000 at any time used for business, but only if the taxes are during 2004. The limit is $50,000 if mar- based on the assessed value of the property. ried filing separately. An example of this Also, the assessment must be made uni- type of mortgage is a home equity loan Line 8 formly on property throughout the commuor pay tuition. used to pay off credit card bills, buy a car, nity, and the proceeds must be used for Other Taxes general community or governmental pur- If you had any deductible tax not listed on 2. You took out any mortgages after Ocposes. Pub. 530 explains the deductions line 5, 6, or 7, list the type and amount of tober 13, 1987, and used the proceeds to homeowners may take. tax. Enter only one total on line 8. Include buy, build, or improve your home, and on this line income tax you paid to a foreign these mortgages plus any mortgages you Do not include the following amounts country or U.S. possession. took out on or before October 13, 1987, on line 6. totaled over $1 million at any time during • Itemized charges for services to speing separately. You may want to take a credit 2004. The limit is $500,000 if married filcific property or persons (for example, a for the foreign tax instead of a TIP $20 monthly charge per house for trash col- deduction. See the instructions lection, a $5 charge for every 1,000 gallons for Form 1040, line 46, for If the total amount of all mortdetails. of water consumed, or a flat charge for gages is more than the fair marmowing a lawn that had grown higher than ket value of the home, permitted under a local ordinance). additional limits apply. See • Charges for improvements that tend to Pub. 936. increase the value of your property (for ex- Interest You Paid ample, an assessment to build a new side- Whether your interest expense is treated as Line 10 Home Mortgage Interest walk). The cost of a property improvement investment interest, personal interest, or is added to the basis of the property. How- business interest depends on how and when Enter on line 10 mortgage interest and ever, a charge is deductible if it is used only you used the loan proceeds. See Pub. 535 points reported to you on Form 1098. If this to maintain an existing public facility in for details. form shows any refund of overpaid interest, service (for example, a charge to repair an do not reduce your deduction by the refund. existing sidewalk, and any interest included In general, if you paid interest in 2004 Instead, see the instructions for Form 1040, in that charge). that applies to any period after 2004, you line 21. can deduct only amounts that apply for If your mortgage payments include your 2004. If you paid more interest to the recipient real estate taxes, you may deduct only the than is shown on Form 1098, see Pub. 936 amount the mortgage company actually to find out if you can deduct the additional interest. If you can, attach a statement expaid to the taxing authority in 2004. Lines 10 and 11 plaining the difference and enter “See at- If you sold your home in 2004, any real tached” to the right of line 10. estate tax charged to the buyer should be A home mortgage is any loan that is seshown on your settlement statement and in If you are claiming the mortcured by your main home or second home. box 5 of any Form 1099-S you received. gage interest credit (see the in- It includes first and second mortgages, This amount is considered a refund of real structions for Form 1040, line home equity loans, and refinanced mortestate taxes. See Refunds and rebates on 53), subtract the amount shown gages. this page. Any real estate taxes you paid at on Form 8396, line 3, from the total deductclosing should be shown on your settlement A home may be a house, condominium, ible interest you paid on your home mortstatement. cooperative, mobile home, boat, or similar gage. Enter the result on line 10. A-3
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Note. This booklet does not contain
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What is IRS e-file? It’s the fast
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Tax Return Page Reference Questions
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Quick and Easy Access to Tax Help a
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Topic TeleTax Topics No. Subject No
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Before You Fill In Form 1040 See Ho
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Chart B—For Children and Other De
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Form Item and Box in Which it Shoul
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Line 2 December 31, 2004, you were
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Form 1040—Lines 7 and 8a less tha
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gross income was over $139,500 ($69
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Form 1040—Lines 16a and 16b Age (
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Form 1040—Lines 20a and 20b Socia
Page 27 and 28: Form 1040—Line 25 IRA Deduction W
Page 29 and 30: Form 1040—Lines 27 Through 29 for
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Page 33 and 34: Form 1040—Lines 41 and 43 Tax Tab
Page 35 and 36: Line 44 • Tax-exempt interest fro
Page 37 and 38: Line 51—Child Tax Credit What Is
Page 39 and 40: ured the credit. Check box c and en
Page 41 and 42: Lines 65a and 65b— Earned Income
Page 43 and 44: Form 1040—Lines 65a and 65b Conti
Page 45 and 46: Worksheet A—Earned Income Credit
Page 47 and 48: Form 1040—Lines 65a and 65b Works
Page 49 and 50: 2004 Earned Income Credit (EIC) Tab
Page 55 and 56: number is 20202086. Do not include
Page 57 and 58: You cannot sign your return are not
Page 59 and 60: site at www.aarp.org/taxaide or cal
Page 61 and 62: 2004 Tax Table—Continued If line
Page 71 and 72: If line 42 (taxable income) is— A
Page 73 and 74: Order Blank for Forms and Publicati
Page 75 and 76: Disclosure, Privacy Act, and Paperw
Page 77: Department of the Treasury Internal
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Page 83 and 84: Instructions for Schedule B, after
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Page 99 and 100: sale of your main home if you are n
Page 101 and 102: follow the applicable instructions
Page 105 and 106: which you entered the combined tota
Page 107 and 108: If your rental real estate loss is
Page 111 and 112: gain results from redemption of the
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Page 117 and 118: 2001 Capital Gain Tax Worksheet—L
Page 119 and 120: 2002 Tax Rate Schedules—Line 12 S
Page 121 and 122: 2003 Tax Rate Schedules—Line 16 S
Page 125 and 126: homes, parking lots, warehouses, an
Page 127 and 128: Index to Instructions A Foreign Tax
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2004 Instructions for Form 1040 (ALL) - Supreme Law Firm

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